Total assets under management of the largest 500 money managers worldwide jumped 8.2% to $68 trillion in 2012, with U.S.-based managers controlling the largest market share in a decade, according to the Pensions & Investments/Towers Watson World 500 ranking.
Unlike the previous year, when total assets of the top 500 managers dropped 2.5%, the main factor behind 2012's advance was outperformance of equities over bonds — a key trend that has continued in 2013. However, aggregate assets under management remained below the previous peak of $69.4 trillion recorded at the end of 2007.
“Overall, the relative positions of managers would have been determined by whether the managers were heavily invested in equities as opposed to government bonds,” said Craig Baker, global head of research at Towers Watson & Co., Reigate, England.
So far this year, “performance has been more or less a continuation of 2012,” Mr. Baker said. “Bonds look less good, but not awful, although there has been a bit more volatility in bonds.”
The Russell 3000 index added 16.4% for the year ended Dec. 31, 2012, and 21.3% in the first nine months of this year. The MSCI All Country World index returned 16.1% in 2012 and 14.4% through Sept. 30 this year. However, the Barclays Capital Global Aggregate bond index gained 4.3% last year but lost 2.2% in the first three quarters of 2013.
The most important determinant in asset growth for the next several years will be “what happens to bond yields, because a lot of the managers have got a lot in bonds, and a lot in government bonds,” Mr. Baker said.
In first and second place on the list, respectively, BlackRock Inc. and Allianz Group are prime examples. “If yields do revert and go up considerably, then those guys are going to suffer more,” Mr. Baker said. “Of course they're so big that they may well stay at the top, but their numbers are going to come down a fair bit.”